Atlassian: ‘We’ll migrate if we can’t get foreign workers’

I wrote this story for The AFR last year (2016) but it never made it to print. I am publishing it here because it seems relevant, given the changes announced this week to the 457 visa.

Mike Cannon-Brookes, founder and CEO of Atlassian

Australia’s start-up community has called on the Federal Government to increase its skilled immigration intake or else face losing some of the county’s most successful start-ups to the US & Europe.

Mike Cannon-Brookes, CEO and co-founder of one of Atlassian said he is faced with relocating the company’s engineering arm out of Australia if it cannot recruit the resources it needs to continue to grow the company locally.

“If we can’t get the experienced talent we need down here, we’ll be forced to move engineering away from the country as a pragmatic choice,” he said. “But I want to keep the majority of my engineers in Australia because I believe in the talent coming through.”

“But if we can’t do that, I’ll have to start hiring them in Austin because it is becoming really hard to build a local industry here, which is essential to Australia.”

More than 25% of Atlassian’s Australian staff live and work on a 457 visa but Cannon-Brookes says he can’t fill positions quickly enough. Seventy-five percent of people approached by the company to move Down Under turned down the job, citing cost of living as the determining factor.

Atlassian lost more than half of its Australian staff three years ago after the Living Out Of Home Allowance – which allowed skilled workers to claim rent, food and fuel as tax free – was cut from the 457 visa.

“The living away from home allowance was a part of their overall compensation package for being here,” he said.

Atlassian is “heavily affiliated” with Australian universities and offers more than 25 scholarships.

“We hired 80 graduate staff this year,” he said. “Australia has some of the best computer scientists in the world… We’d love to hire more locally but they just don’t exist in the volumes we need,” he said.

The government shouldn’t be punishing foreign workers for helping to build an Australian innovation hub which he says is essential for driving the new economy.
Australia is currently home to more than 170,000 temporary skilled workers, costing companies up to $10,000 per person to get into the country and up to $7000 for a partner visa.

Skilled workers on the 457 or other visas face up to $10,000 in legal fees and are required to jump through “bureaucratic hoops” to satisfy the requirements of the Immigration Department.

With compulsory two to three month waiting periods between jobs, those with offers on the table risk losing the position because they cannot start straight-away.

Workers with children face paying around $5000 a year, per child to attend public school.

“You’ve got to be earning that much more,” said Cannon-Brookes. “And the company has to pay. The costs add up, for workers and for companies.”

Skilled workers on a 457 visa must take out private health-insurance whether or not they have reciprocal coverage.

Atlassian offers private healthcare as part of its remuneration package, but it costs the company “roughly double” than if workers were paying for it themselves.

“Especially for people moving from Europe who are used to a largely public schooling and healthcare system, suddenly they have to pay for private health cover just to qualify for their visa, it’s discouraging,” he said.

“All of these things could be solved by the government, to fundamentally tip the scales in favour of someone moving here.”

A 41-year-old digital marketer from Scotland who spoke on the condition of anonymity revealed that though he has reciprocal health cover thanks to a deal struck between the Australian and UK governments, to qualify for his visa he is required to buy private medical insurance.

However, Jason Held, Founder and CEO of Saber Astronautics, one of Australia’s only commercial space flight start-ups said that while he concurs the cost of living is a restrictive feature of skilled migration he “feels strongly” that there is plenty of talent “here in Oz”.

“I can train someone to be a space engineer and cringe when I hear a business claiming a lack of talent locally,” he said. “Any business that can’t find the talent isn’t doing enough interesting work to attract the talent and it’s as simple as that.”

Peter Bradd, CEO of the Beanstalk Factory and Chairman of StartupAus said that the market is entering an age of “hyper-specialisation” and that Australia needs to recruit “the best and brightest” in order to train workers to develop specialised skills sets like AI and machine learning in order to grow a globally competitive industry.

“No country has ever successfully built innovation hubs without skilled foreign workers,” he said.

“In Silicon Valley, 70% of software engineers are foreign born. Even with its 323 million people and ivy league schools, it is only providing 30% of the talent, that is how fast demand is growing”.

The government has announced – but has not yet launched – an Entrepreneurs Visa to attract founders to launch businesses in Australia. The new visa is understood to be in consultation.

“I also asked the Immigration Department whether it would be advertising the fact that entrepreneurs can move to Australia but the answer was that they didn’t have an answer,” Bradd said.

With 40 per cent of Australian jobs – roughly five million people – expected to be replaced by automation within the next 10-15 years according to the Committee for the Economic Development of Australia’s Future Workforce Report, Bradd said it is “crucial” to the Australian economy, that the government get growth conditions right

The CEO says the ASX 20 accounts for 50% of Australia’s GDP. Sixty-five per cent of Australia’s economy is due for “disruption” by 2017, comprising 13 industries with FinTech identified as the most vulnerable sector according to Deloitte.

Australia’s technology sector has the potential to contribute $109 billion to the economy – roughly 4% of GDP – and create 540,000 jobs by 2033, according to Price Waterhouse Cooper’s study on The Startup Economy.

“Five million Australians will need to move to a skillset of the future,” Bradd said. “That’s five times the size of the audience that watched the Q&A innovation special.”

A discussion paper released by Chandler Training, a Sydney firm that provides training for businesses employing staff on 457 visas examined the social and economic benefits of bringing people to Australia, and found that “it not only helps to develop the economy by increasing revenue and taxes, it also helps businesses to grow and develop, and continue to employ Australian workers.”

The CEO also said the visa application process was “too long, clunky and expensive compared to other developed countries”.

Eva Massie, a Parisian engineering student studying at Le Institut D’Administration Des Entreprises (Institute of Business Administration) said she was offered an internship at NICTA about 18 months ago but was forced to turn it down due to the “complicated” application process, cost of living issues and a second offer with a competing deadline.

Eva Massie scored a full time job at a US firm based in Germany after she was forced to turn down an offer at Australia’s NICTA due to via problems.

She subsequently accepted an offer from Karlsruhe based Itron Group in mechanical engineering “because Germany is completely open for foreign workers” which would end up employing her to work as an helicopter engine and motor design specialist.

NICTA & Data 61 declined to comment.

Even migrants who are already living in Australia – students in particular – are being prevented from finding work in their field.

Harvin Shah, an accounting student at Macquarie University said he missed out on full time job at Jones Partners Insolvency & Business Recovery firm because his visa only allows him to work 20 hours or less a week.

“Whereas it was just because of the stringent immigration requirements and unnecessary and senseless financial burden on the employer that my job didn’t materialise. Shouldn’t a genuine employer offering me a job, sufficient enough requirement to be able to work

“It left me upset for a long, long time, especially because I was so close. I had already seen where I was about to sit and everything, and it didn’t materialise.”

Macquarie accounting student, Harvin Shah

Despite this, Shah identifies with the challenge facing the Australian government:

“On the one hand Australia is taking initiative along with other developed countries to have free flow of trade & labor globally, but whereas on the other hand in reality it is doing the exact opposite of what it is pledging, (in regards to) Hippocratic Tendency,” he said.

Bruce Gleeson, owner and principal of Jones Partners Insolvency & Business Recovery said the firm doesn’t often hire skilled workers on a visa but said that Harvin was “the exception that came to us via his university studies”.“We also recognise the market for young accounting professionals continues to evolve rapidly and it would have been great if we could have offered him the role,” he said.

Gleeson said other smaller firms were experiencing similar problems.

Erskine Rodan, owner of Erskine Rodan & Associates and Chairman of the Migration Law Committee of the Law Council of Australia said the Immigration Department has been cracking down on visa nomination applications.

The rate of 457 nomination refusals increased from 1% prior to 1 July 2013 to 5% in 2013-14, with approximately 11% of nomination applications now being refused.

Multi-million dollar Australian businesses are being forced to deal with junior immigration officers “who don’t understand how these businesses operate and the positions they’re recruiting,” because of the cuts caused by the merging of Customs and Border Protection.

“Many of these refusals are junior officers effectively telling these companies that they don’t believe a position is genuine because they have a better idea of how the business should be run and what positions they should recruit,” Mr Rodan said.

The immigration lawyer said the department was especially suspicious of start-up companies and certain occupations.

“Many of the companies, they take a few years to expand and so forth,” he said. “But the Department of Immigration are very suspicious of these people.”

“I’m increasingly seeing situations where the Immigration Department will try and deny a nomination for a subclass 457 visa, saying that the position is not genuine and was made up to get a visa.

“Even if that were correct – and it’s not – that is creating a job. You are creating a job, and a salary which that person can then spend and pay tax on.”

A spokesperson for the Department of Immigration and Border Protection said “integrity measures” had been introduced to combat worker and employer exploitation.

“The Government views temporary and permanent skilled workers from overseas as an important part of the Australian economy to fill skill gaps in the Australian workforce,” the spokesperson said.

“Thousands of Australian companies are sponsoring skilled workers to fill skill shortages that can’t be filled from local labour markets. The Government has been concerned about worker exploitation and the fact that some employers have abused the system. As a result, integrity measures have been tightened to ensure the overseas workers are skilled and are filling genuine shortages and are not taking jobs that should be going to Australians.

“However, companies that have a track record of employing and training Australians and can show a genuine skill shortage have little difficulty in proving their case. The Government is routinely consulting with the industry to streamline the process for companies, while maintaining the integrity of the system.”

Immigration Minister Peter Dutton has been contacted for comment but at time of filing had not responded.

Claire Connelly is working on her first book, How The World Really Works, a guide to recognising rhetorical red flags and immunising yourself against bullshit. You should definitely buy it when it comes out. A podcast of the same name will also be launching in the coming months.